Small prestige car business start up.

[Waitey]

Hello Gents,

I'm looking for some guidance. Between myself and some friends we have a wide and varied collection of sports/rare/prestige cars. We've always used just traditional private sales methods for selling. Now its gotten to the point where we really should have a business, since we are holding around 5 cars each, 15 in total so the stock is there.

I have a location with garages, storage and an office to run the operation from already.

I'd look to see the first round of 15 as technically sale or return type cars, since they are all currently financed by ourselves and we'd want to keep the capital put into the business low for the first round. The new company would charge around £500 to sell each car. After the that the proceeds of the sales can go back in as directors loans to allow us to seek further stock.

One of the group runs a finance brokerage company so that would be no issue.

Trade/storage and public liability insurance is no issue either.

How would we go about getting trade plates et al?

I'm guessing we just need a company name (registered with Companies house/HMRC, I'm not sure turn over will pass £75k in the first year if doing sale or return so no need for vat registering at the moment) and a website to start off then build from there?

Looking forward to hearing your thoughts!

[Monkeylegend]

If you are not turning over more than £75k in a year you probably don't have a viable business to support you all.

Five cars at £15k each and you are there. That's a hobby.

[Waitey]

Oh no, we aren't looking to support anything from it.

Its just our car change rate justifies doing it properly.

We all have 'proper' jobs to do the rest of the time....

[rich12]

What MonkeyLegend is saying is that a Jag F type for example would be £50k (example) so you're only £25k away from the threshold after one car.

[Monkeylegend]

Waitey said:

Oh no, we aren't looking to support anything from it.

Its just our car change rate justifies doing it properly.

We all have 'proper' jobs to do the rest of the time....

So it is just a hobby then?

Once you turn over more than £82Kish p.a. you will need to be VAT registered unless you all do it as separate individuals, which is not quite what you seem to want to do.

[Waitey]

Ah I get you now Monkey, well Vat reg is no big issue regardless.

Rich the F type will be one of them! I've got the Mini and a 80 UR Quattro to go too.

[voicey]

If he's doing SoR then is the turnover measured on the value of the car or the fee he's charging to sell it?

[Waitey]

voicey said:

If he's doing SoR then is the turnover measured on the value of the car or the fee he's charging to sell it?

As its two transactions and not one as I thought, you'd go over the threshold.

[Mr Overheads]

voicey said:

If he's doing SoR then is the turnover measured on the value of the car or the fee he's charging to sell it?

i think this is what the VAT threshold question comes down to, is the business going to be arranging the private sale of a car between 2 individuals with the business charging the seller a £500 finders fee for sourcing the buyer. Private Buyer transfers sale rice of the car to the private seller directly and completes the V5 private sale section and the business raises an invoice for £500 to the seller for services rendered.

Or is the nature of the transaction that the Buyer pays the business the full value of the car, then the business keeps £500 and passes the rest onto the seller effectively buying the car into stock on the same day it's sold and the V5 is completed on the trade sale section?

[KevinCorvetteC6]

I would recommend getting in touch with an accountant who understands the motor trade.

[rog007]

How do you propose to manage the warranty side of things? This seems to be the biggest risk when dealing with cars.

[thepeoplespal]

Family member has what could be easily described as a prestige car sales business and the work involved is just incredible, every car is researched, every car is detailed to an extremely high standard and the odd car even has to bought back, if a fix can't be instigated and keep a customer happy.

Reputation is all, difficult to make and all to easy to destroy, so OCD for detail and a very large amount of capital needs to feature heavily in this kind of business.

[jonah35]

Waitey said:

Hello Gents,

I'm looking for some guidance. Between myself and some friends we have a wide and varied collection of sports/rare/prestige cars. We've always used just traditional private sales methods for selling. Now its gotten to the point where we really should have a business, since we are holding around 5 cars each, 15 in total so the stock is there.

I have a location with garages, storage and an office to run the operation from already.

I'd look to see the first round of 15 as technically sale or return type cars, since they are all currently financed by ourselves and we'd want to keep the capital put into the business low for the first round. The new company would charge around £500 to sell each car. After the that the proceeds of the sales can go back in as directors loans to allow us to seek further stock.

One of the group runs a finance brokerage company so that would be no issue.

Trade/storage and public liability insurance is no issue either.

How would we go about getting trade plates et al?

I'm guessing we just need a company name (registered with Companies house/HMRC, I'm not sure turn over will pass £75k in the first year if doing sale or return so no need for vat registering at the moment) and a website to start off then build from there?

Looking forward to hearing your thoughts!

Could you explain, in depth, why you selling a car privately necessitates the need to set up a car sales business?

Are you saying you're a trader already and want to formalise this or are you a private seller? If the latter why set up a business? What do you gain from that other than having to warranty a car?

[mattdaniels]

Why not rent them out instead of selling? A'la PHer MrH of Drive Southwest.

[markmullen]

Buying and selling the odd car and making a business of it are two very separate issues.

I can cook myself dinner but wouldn't think I could open a restaurant.

[TokyoRich]

Mr Overheads said:

i think this is what the VAT threshold question comes down to, is the business going to be arranging the private sale of a car between 2 individuals with the business charging the seller a £500 finders fee for sourcing the buyer. Private Buyer transfers sale rice of the car to the private seller directly and completes the V5 private sale section and the business raises an invoice for £500 to the seller for services rendered.

Or is the nature of the transaction that the Buyer pays the business the full value of the car, then the business keeps £500 and passes the rest onto the seller effectively buying the car into stock on the same day it's sold and the V5 is completed on the trade sale section?

Its on the full value of the car. I used to own a similar business, our local accountants in Maidenhead (I have signed an NDA so sadly cannot name them) initially told us that we could do it on the value of our commission, needless to say the tax man disagreed.... That ended up costing me £65k...